Australian and NZ groups urge PMs to reject US investment demands next week

Professor Jane Kelsey's new book

Just days before next week’s talks in Auckland on the Trans Pacific Partnership Agreement (TPPA), civil society groups from Australia and New Zealand have sent a joint open letter to their Prime Ministers urging them to adopt a progressive and balanced approach to foreign investment.

The letter, signed by 43 organisations, urges the two governments to reject expected US demands for rules and enforcement mechanisms contained in past US free trade deals.

Australia earlier ruled investor-enforcement out of their 2005 free trade agreement with the US. New Zealand Prime Minister John Key recently described the inclusion of investor-state enforcement powers in a TPPA as “far-fetched” and said he expected New Zealand would support Australia’s position in rejecting such a mechanism.

“Public opposition kept these clauses, which allow corporations special rights to sue governments for damages, out of the US-Australia Free Trade Agreement,” said Harvey Purse, Trade Justice Campaigner for the umbrella group AFTINET (the Australian Fair Trade and Investment Network).

“US business groups have made it clear that they want an investor-state complaint process in this agreement. Australians opposed it then, and they will oppose it again with the TPPA,” he said.

New Zealand coordinator of the letter, Professor Jane Kelsey, said that the groups who signed the letter applauded the rejection of investor-state enforcement powers by the two governments as an important first step, and urge them to adopt a similarly forward thinking approach by promoting a different kind of investment agreement.

“We are urging the government to jettison the old-style NAFTA model in favour of an agreement among the TPPA parties that is genuinely fit for the 21st century – one that rebalances investor rights with enforceable responsibilities and restores the primacy of national sovereignty and democratic control over investment-related decisions,” she said.

Harvey Purse said tobacco giant Philip Morris has used an investor-state dispute process to sue the Uruguayan government when it introduced restrictions on tobacco advertising, and the company’s submission on the TPPA has again lobbied for this right for investors to sue governments directly.

He said the Australian government’s plans for plain packaging of cigarettes could be subject to the same kind of legal challenge, costing hundreds of millions of dollars, if tobacco companies gained access to investor-state dispute settlement through a TPPA.

Signatories to the letter include both countries’ peak trade union bodies and other unions, faith and environment groups, the culture sector, investment watchdogs and other community organisations.

Ends.

Contacts

Harvey Purse +61 404 140 886 (Australian coordinator of letter)

Prof Jane Kelsey +64 21 765 055 (NZ coordinator of letter)

Dr Bill Rosenberg +64 21637991 (NZCTU economist)

Background

The letter is copied below

3 December 2010

Rt Hon Julia Gillard, Prime Minister of Australia

Rt Hon John Key, Prime Minister of New Zealand

Open Letter to the Prime Ministers of Australia and New Zealand

Dear Prime Ministers

The proposed Trans-Pacific Partnership Agreement (TPPA) has been branded a “free trade agreement” by its corporate and government proponents. In reality, the main function of the agreement would be to establish an array of new investor rights and privileges that could undermine vast swathes of important non-trade laws, policies and practices in the nine countries currently involved. These constraints would bind our governments into the indefinite future.

Perversely, the TPPA proposal is being sold as a new agreement for the 21st century. In fact, the US is effectively setting the terms for negotiations, based on a standard template that replicates the US North American Free Trade Agreement (NAFTA) model.

We know from the experience in the US, Canada and Mexico that the NAFTA model eliminates the crucial policy space that our governments need to address the employment, climate, financial and energy crises that will dominate the next century. It not only establishes vast new investor rights to acquire land, natural resources, financial and other firms and operate them under deregulated terms – it also elevates private investors to equal status as sovereign government signatories to the agreement. Under the US Free Trade Agreement (FTA) model, foreign investors and corporations are empowered to privately enforce their new “trade” pact privileges by suing signatory governments in foreign World Bank and UN tribunals, seeking monetary compensation for government actions they consider to undermine their expected future profits.

If a TPPA follows that old investor-rights model, decisions on development of our economies, management of our natural resources and land, our access to medicines, cultural content, banking regulation, environment and labour laws, food labelling, tobacco control policies, and much more will be circumscribed from outside the country, with the threat of challenge by foreign firms in private international courts chilling critical innovations and potentially threatening some existing policies.

Trade agreements should focus on real trade. They should not provide a means for corporations to achieve policies and laws through a back door that bypasses the democratic processes of domestic parliaments.

Moreover, investment rules in an agreement for the 21st century should address the damaging by-products of the old model – climate change, food scarcity, financial instability, an employment crisis, natural resource exhaustion, indigenous dispossession and rampant inequality – and make the corporations and investors that are responsible for these crises accountable and liable.

In addition to establishing corporate and investor responsibilities, any future investment agreement must exclude the substantive rules and enforcement mechanism of past investor-rights agreements that make them unacceptable. These include:

Investor-state enforcement privileges that elevate individual investors and firms to equal status with our sovereign governments, empowering them to enforce a public treaty’s commercial provisions privately by demanding cash compensation from country’s taxpayers for government regulatory actions via lawsuits before international tribunals that lack public accountability, standard judicial ethics rules, and appeals processes.

The empowerment of secretive international tribunals at the UN and World Bank that supplant domestic courts and apply international agreements to undermine the validity of domestic laws and require our countries to compensate investors and corporations with our taxpayer funds. Arbitrators in those tribunals are not subject to any effective conflict of interest rules and crucial documents and proceedings are closed to the public and press.

Entitlement to prior consultation on proposed policies and regulations that guarantee foreign investors more input into domestic decisions than the country’s own citizens.

Vaguely worded provisions guaranteeing foreign investors a “minimum standard of treatment”, including “fair and equitable treatment,” that extend beyond guarantees of due process and confer preferential treatment on foreign firms relative to their domestic counterparts.

Corporate rights to compensation for regulatory costs in the guise of protection against “indirect” expropriation by regulations and other government actions that reduce the value of a foreign investment. The threat of massive damages awards can have a “chilling effect” on policymaking, with important policies being reversed or never being implemented. It is misleading to suggest that annexes and tweaks added to recent FTAs provide effective protection from these threats.

Far-reaching definitions of “investment” that must be provided with new protections and privileges under an FTA extend far beyond real property rights and other specific interests in property to include speculative financial instruments, natural resource concessions, procurement contracts and intellectual property rights, over which governments must retain effective regulatory authority.

Pre-establishment rights for investors that remove the host government’s right to review foreign investment proposals to ensure that they meet the public interest.

Constraints on capital controls and other financial regulatory tools that can minimise hot money flows and excessive concentration of financial investors, restrict the sale of risky financial products and services, and open prudential measures to investor and state challenge. Again, the misleadingly termed “prudential carve-out” does not provide effective protection for these measures.

The subsidiary loophole that allows corporations to bypass their domestic courts by using “trade” pacts and their foreign subsidiaries located in a FTA or Bilateral Investment Treaty partner nation to attack their domestic laws from outside the country.

We note that the US-Australia FTA does not contain the outrageous provision on investor-state disputes, and the Australian government remains opposed to its inclusion in any TPPA. We applaud that position as an important first step, and urge the government to adopt a similarly forward thinking position in relation to the other matters we have raised.

We also note that the New Zealand Prime Minister has described the inclusion of such powers in a TPPA as “far-fetched” and expects that New Zealand would support Australia’s position. Minister of Trade Tim Groser subsequently stated in Parliament that the government would carefully safeguard the sovereignty of New Zealand to entertain good public policy in accordance with the principles of open government. It is clear that the only way to achieve that outcome is not just to reject investor-state disputes procedures, but also to pursue an investment agreement that is premised on the principles outlined above.

Across the political spectrum in our countries, opposition is building to investor-rights agreements that threaten to lock us into policies and approaches that have proved a failure.

Our governments must re-think the dangerously outdated NAFTA-style approach to investment and genuinely engage with their citizens to develop a new model investment agreement that is genuinely fit for the 21st century.

Sincerely,

Australian Council of Trade Unions (ACTU)

New Zealand Council of Trade Unions (NZCTU)

Australian Catholic Social Justice Council (ACSJ)

Friends of the Earth, Australia (FOE)

Public Health Association of Australia (PHAA)

Public Health Association of New Zealand (PHA)

Australian Fair Trade and Investment Network (AFTINET)

Music Council of Australia (MCA)

Australian Education Union (AEU)

Australian Manufacturing Workers Union (AMWU)

Australian Nursing Federation (ANF)

Australian Writers Guild (AWG)

Australian Services Union (ASU)

Community and Public Sector Union – State Public Services Federation (CPSU – SPSF)

02 November 2008 –

Press Release by New Zealand Government at 3:13 pm, 15 Oct 2008

The Government is inviting submissions on New Zealand’s upcoming FreeTrade Agreement negotiations with the United States as part of theTrans-Pacific Partnership (currently called the P4), Trade Minister PhilGoff said today.

The negotiations were announced in New York on 22 September, following ameeting between Mr Goff, United States Trade Representative Susan Schwaband trade ministers from Singapore, Chile and Brunei (the other P4countries).”The US is the world’s largest economy, with more than 270 millionconsumers with a very high average income, notwithstanding recenteconomic difficulties,” Phil Goff said.”It is New Zealand’s second largest export market. Total trade with theUS in the year to June 2008 was worth $8.14 billion, accounting for 9.6per cent of New Zealand’s overall total trade. That means this deal isof huge significance to New Zealand.

“An American study on the impact of an FTA with the US, the BergstenReport, published in 2002, estimates that New Zealand exports to the USwould rise by $1 billion.”That figure is indicative only. With its membership likely to expandfurther, the Trans-Pacific Partnership will likely bring much greaterbenefit for New Zealand and the US. The strategic benefits to the US should win bipartisan support for the agreement and ensure that it isboth high quality and comprehensive in nature.”

In the current world economic climate, improving market access for Kiwiexporters, and the boost to growth, jobs and confidence that thisprovides, makes this negotiation and proposed agreement criticallyimportant.”The more favourable New Zealand exchange rate will also boost exporterconfidence. New Zealand’s export future however, relies not on cheapnessbut on quality and innovation.”Essential to this is the encouragement of research and developmentpromoted by both Labour’s 15 per cent tax credit for R and D and the$700 million Fast Forward Fund for the primary sector.”National’s promise to eliminate these policies is incomprehensible,”Phil Goff said.

“Our major exports to the US, dairy and meat, will benefit significantlythrough the removal of export quotas.”Horticultural exports to the US worth $370 million last year currentlyface tariffs of up to 23 per cent. They will also be significantbeneficiaries.”Fish and seafood, industrial products, metal products, wood, pulp andpaper account for more than $1.5 billion in New Zealand exports to theUS.These too will be able to trade into the US at lower cost.”New Zealand companies will also be able to bid for US Governmentprocurement contracts, worth an estimated $200 billion a year.”One example of facilitating new opportunities for New Zealand exportersis in the US Territory of Guam, where US Marines are transferring tofrom Okinawa over the next five years. This involves contracts of around$14 billion for work such as building and support services around thenew base.

An FTA with the US could allow New Zealand companies to bid directly forDefense Department projects.”Our high tech companies will also benefit. Christchurch-based TaitElectronics last week welcomed the advantages an FTA with the US wouldbring, allowing them to bid for US Government contracts, currentlyblocked under the Buy American Act.”Tait said this would greatly reduce the time and effort taken to meetUS regulations to export its radio equipment into the US. It would alsoallow it to bring its manufacturing base back from Texas to NewZealand,” Phil Goff said.”Public submissions are an essential part of a consultation process thatwill take place as the negotiations proceed.

The negotiations are due tobegin in March 2009, and are expected to be completed within 12 to 24months,” Phil Goff said.Background to the negotiations and an online submission form areavailable on the Ministry of Foreign Affairs and Trade Website,mfat.govt.nz.

Socialists condemn Labour Party’s Free Trade deal

Tuesday, 23 September 2008, 1:07 pmPress Release: Socialist Aotearoa

Socialists condemn Labour Party’s Free Trade deal with the USA

A secret Free Trade Deal with the USA was sprung on an unsuspecting public, as the neo-liberal NZ Labour Party revealed both its contempt for democracy and its affinity with the blood soaked regime in Washington. However, the fact that this deal was done in secret also betrays the fact that such bilateral Free Trade deals are deeply unpopular with workers, despite being supported by most mainstream political parties and the craven

The support of both Labour and the CTU for the preceding Chinese Free Trade deal with the Butchers of Tienanmen Square has already resulted in disaster for Chinese workers. Fonterra gained a 43% stakehold in the corrupt Sanlu corporation, whose Managing directors are also provincial leaders of the murderous Communist Party. Sanlu ensured that the poisoning of Fonterra’s dairy products were covered up during the “scandal free” Olympics, which also saw the imprisonment of leading activists and the oppression of Tibetan and Uighur independence movements. For Fonterra, Labour and the CTU, human rights and democracy were not more important than making money with a Stalinist regime so ruthless, it would cover up the poisoning of its own children.

In contrast, socialists were on the streets championing Chinese workers rights and the right of Tibetans to independence. We also opposed the many wars of the USA, and campaign to bring NZ troops home from Iraq and Afghanistan. Socialists also helped to build the Global Justice movement which was a significant factor in the collapse of the Doha round and the World Trade Organisation. Corporate Globalisation has lost the battle for political legitimacy, and free market capitalism itself now faces a gigantic ideological crisis as it appeals to States to intervene and prop up its banks.
The US ruling class are caught in a blind panic. Last Monday they allowed Lehman Brothers (US third biggest bank) to go to the wall, the very next day they bailed out the world s biggest insurance company AIG. What we have seen is the biggest state intervention in world history. Over the last few days the World Bank and US governments have spent hundreds of billions of dollars buying up debts and bailing out collapsing institutions. This has certainly given them a temporary breathing space. But the problems of the system have not gone away.

The New Zealand economy now finds itself open to these rapacious forces which will be eying its remaining public assets for privatisation. Socialist Aotearoa will be to the fore in resisting any attempts by capital, foreign or domestic, to steal that which should be for the public good, not private profit.

An expected free trade agreement with ASEAN nations will increase New Zealand’s official links with the Burmese military regime.

The ASEAN, Australia and New Zealand Free Trade Agreement (AANZFTA) is currently under negotiation with the expectation that a draft will be agreed later this month. An announcement of the agreement is expected at the ASEAN Economic Minister’s meeting in late August.

Trade between New Zealand and Burma is limited (see figures below), and it is not expected that trade in goods will increase to significant levels as a result of this agreement. However, as the Burmese regime maintains monopolies on the export of most of the country’s products and much of the economy is controlled by the military, any business with Burma is likely to put money directly into the hands of the repressive government.

The agreement may also see an increase in contract work and service provision. A New Zealand state-owned company, Kordia, has previously done engineering work on cell tower installations for government-controlled Myanmar Post and Telecommunications.Continue reading →

The Ministry of Foreign Affairs and Trade recently announced the opening of negotiations with Singapore, Chile and Brunei to extend a two year old trade and investment agreement (the grandly named Trans-Pacific Strategic Economic Partnership – often known as the P4) into investment and financial services. Any extension into investment would certainly limit the Government’s right to regulate overseas ownership of New Zealand assets. What makes these negotiations especially significant is the announcement that the US is joining in.

Campaign Against Foreign Control of Aotearoa (CAFCA) has launched a campaign against New Zealand signing any such agreement.

Listening to both major political parties, most media commentators and big business, New Zealanders would think that free trade agreements hold the key to our economic future. Few people – including the above – understand enough about them to assess their implications. Signing them is more an act of faith. And it has very little to do with ‘trade’ as we used to understand it. New generation agreements, like those signed with China and under negotiation with the US, basically trade-off future gains for Fonterra and a handful of other businesses for guarantees that foreign corporations and investors can plunder New Zealand’s remaining assets and resources without restraint. This is perplexing, when the same government has finally recognised that some strategic assets need to remain in local hands. On a larger scale, the frenzy to sign new agreements comes at a time when food shortages, climate change, peak oil and contagious finance-market collapses make the global free market model seem unsustainable.

Why is there so little discussion of these agreements in New Zealand? Does the China agreement mean there is now little point in opposing them? What would an agreement with the US add? How do we extricate ourselves from this straitjacket when we decide that these agreements aren’t really good for New Zealand after all? Jane Kelsey is one of New Zealand’s best-known critical commentators on issues of globalisation, structural adjustment and decolonisation. As an activist academic, she combines teaching and research with public education about the negative implications of ‘free trade’ agreements, especially on trade in services.

Jane is an active member of a number of international coalitions of academics, trade unionists, NGOs and social movements working for social justice. Jane is the author of many books and articles on the neoliberal restructuring of New Zealand since 1984, including the best-selling ‘The New Zealand Experiment. A World Model for Structural Adjustment?’. Her latest book on globalisation, ‘Serving Whose Interests? The Political Economy of Trade in Services Agreements’, was published by Routledge in June 2008.